Kennedy v Law Society of Ireland

• Jurisdiction: Ireland
• Court: High Court
• Judge: Kearns J.
• Judgment Date: 05 October 1999
• Neutral Citation: [1999] IEHC 255
• Date: 05 October 1999
• Docket Number: [1996 No. 155 J.R.]

[1999] IEHC 255

THE HIGH COURT

No. 133J.R./1996

KENNEDY v. LAW SOCIETY OF IRELAND & ORS

JUDICIAL REVIEW

BETWEEN

GILES J. KENNEDY CARRYING ON PRACTISE UNDER THE STYLE OF GILES J. KENNEDY & COMPANY

APPLICANT

AND

LAW SOCIETY OF IRELAND, PATRICK JOSEPH CONNOLLY AND AISLING FOLEY

RESPONDENTS

Citations:

SOLICITORS ACCOUNTS REGS (NO 2) 1984 SI 304/1984 PARA 29

LILLICRAP V NALDER & SON 1992 142 NLJ 1449 1993 1 WLR 94

SOLICITORS (AMDT) ACT 1994 S14

SOLICITORS ACT 1954 S4

SOLICITORS ACT 1954 S5

SOLICITORS ACT 1954 PART II

SOLICITORS ACT 1954 PART III

SOLICITORS (AMDT) ACT 1960 PART III

SOLICITORS ACT 1954 PART IV

SOLICITORS ACT 1954 PART V

SOLICITORS ACT 1954 PART VII

SOLICITORS ACT 1954 S66

SOLICITORS ACT 1954 PART VIII

SOLICITORS ACT 1954 S71

SOLICITORS (AMDT) ACT 1960 S7

SOLICITORS (AMDT) ACT 1960 S7(1)

SOLICITORS ACT 1954 S19

SOLICITORS (AMDT) ACT 1960 S27

SOLICITORS ACT 1954 S20

SOLICITORS ACT 1954 S21

SOLICITORS (AMDT) ACT 1994 S29

SOLICITORS ACT 1954 S31

SOLICITORS ACCOUNTS REGS (NO 2) 1984 SI 304/1984 REG 3

SOLICITORS ACCOUNTS REGS (NO 2) 1984 SI 304/1984 REG 7

SOLICITORS ACCOUNTS REGS (NO 2) 1984 SI 304/1984 REG 10

SOLICITORS ACCOUNTS REGS (NO 2) 1984 SI 304/1984 PART IV

SOLICITORS ACCOUNTS REGS (NO 2) 1984 SI 304/1984 PART V

SOLICITORS ACCOUNTS REGS (NO 2) 1984 SI 304/1984 REG 21

SOLICITORS ACCOUNTS REGS (NO 2) 1984 SI 304/1984 REG 22

SOLICITORS ACCOUNTS REGS (NO 2) 1984 SI 304/1984 REG 22(4)

SOLICITORS ACCOUNTS REGS (NO 2) 1984 SI 304/1984 PARA 5

SOLICITORS ACCOUNTS REGS (NO 2) 1984 SI 304/1984 REG 22 PARA 1

SOLICITORS ACCOUNTS REGS (NO 2) 1984 SI 304/1984 REG 22 PARA 2

SOLICITORS ACCOUNTS REGS (NO 2) 1984 SI 304/1984 REG 22 PARA 3

SOLICITORS ACCOUNTS REGS (NO 2) 1984 SI 304/1984 REG 22 PARA 4

SOLICITORS ACCOUNTS REGS (NO 2) 1984 SI 304/1984 REG 23

SOLICITORS ACCOUNTS REGS (NO 2) 1984 SI 304/1984 PART VI

SOLICITORS ACCOUNTS REGS (NO 2) 1984 SI 304/1984 REG 29

SOLICITORS ACCOUNTS REGS (NO 2) 1984 SI 304/1984 REG 29(2)

SOLICITORS (AMDT) ACT 1960 S33(1)

PARRY-JONES V LAW SOCIETY 1968 CH 195, 1967 3 AER 248 & 1968 1 AER 177

SOLICITORS ACCOUNTS REGS (NO 2) 1984 SI 304/1984 REG 31(1)

R V INLAND REVENUE COMMISSIONERS EX-PARTE TAYLOR 1990 2 AER 409

SWAIN V LAW SOCIETY 1982 2 AER 827

CASSIDY V MIN FOR INDUSTRY & COMMERCE 1978 IR 297

SOLICITORS ACCOUNTS REGS (NO 2) 1984 SI 304/1984 REG 29(3)

DE SMITH JUDICIAL REVIEW 5ED CH 6 330–332

R V INNER LONDON EDUCATION AUTHORITY EX-PARTE WESTMINSTER CITY COUNCIL 1986 1 AER 19

WESTMINSTER CORP V LONDON & NORTH WESTERN RAILWAY CO 1905 AC 426

WADE ADMINISTRATIVE LAW 5ED 388

DE SMITH JUDICIAL REVIEW 4ED 329–332

HANKS V MIN FOR HOUSING & LOCAL GOVT 1963 1 AER 47

MURRAYS APPLICATION, IN RE 1987 NIJB 12

HAUGHEY, IN RE 1971 IR 217

HAUGHEY V MORIARTY UNREP GEOGHEGAN 28.4.1998

HAUGHEY V MORIARTY UNREP SUPREME 28.7.1998

AG V LEEDS CORP 1929 2 CH 291

GRAY & CATHCART V PROVOST OF TRINITY COLLEGE 1910 1 IR 370

WILLIAMS V QUEBRADA RAILWAY LAND & COPPER CO 1895 2 CH 751

MURPHY V KIRWAN 1993 3 IR 501

JACKSON & POWELL ON PROFESSIONAL NEGLIGENCE 3ED 650–1

LONDON & GENERAL BANK (NO 2), IN RE 1895 2 CH 673

KINGSTON COTTON MILL (NO 2), IN RE 1986 2 CH 279

MCBRIDES LTD V ROOKE & THOMAS 1941 4 DLR 45

TRUSTEE OF THE PROPERTY OF APFEL (A BANKRUPT) V ANNAN DEXTER & CO 1926 70 ACCT LR 57

LEEDS ESTATE BUILDING & INVESTMENT CO V SHEPHERD 1887 36 CH D 787

FOMANTO (STERLING AREA) LTD V SELSDON FOUNTAIN PEN CO LTD 1958 1 AER 11

DPP, PEOPLE V HOWLEY 1989 ILRM 629

SOLICITORS (AMDT) ACT 1960 S19

SOLICITORS (AMDT) ACT 1960 S20

SOLICITORS ACCOUNTS REGS (NO 2) 1984 SI 304/1984 REG 29(1)

UZELL V DUBLIN CORP

FARRELL V SOUTH EASTERN HEALTH BOARD 1991 2 IR 291

NATIONAL IRISH BANK, IN RE 1999 1 ILRM 321

NATIONAL IRISH BANK, IN RE 1999 2 ILRM 443

SOLICITORS ACT 1954 S73

SOLICITORS ACCOUNTS REGS (NO 2) 1984 SI 304/1984 REG 21(3)(b)

Synopsis

Administrative Law

Administrative; judicial review; investigation of applicant solicitor's practice by the Law Society pursuant to Article 29, Solicitors" Accounts Regulations (SI No. 304 of 1984); applicant became aware that the investigating accountant was seeking a large number of files rather than simply sampling on a random basis for verification and vouching of financial records; evidence disclosed that the Law Society had another agenda, namely the investigation of the possibility of fraudulent claims; whether the Solicitors" Accounts Regulations, 1984, contain authority for such an investigation; whether the Charter of the Law Society provides authority for such an investigation; whether the investigation of fraudulent claims is either the dominant purpose of the investigation or, in the alternative, an irrelevant consideration prompting the investigation.

Held: Where an instance of fraud is uncovered in the accounts and records of a solicitor, the investigation accountant has the right and duty to explore any area of possible fraud which may be reasonably connected with the fraud found in the books; an investigation under the 1984 Regulations should not be impugned unless it can be shown that the investigation of the books and records was merely a colourable device or cover for the pursuit of some unauthorised or improper considerations; a reasonable connection does exist in this case; the extended investigation is a proper one within the meaning of the Solicitors" Accounts Regulations, 1984; the Charter of the Law Society does not authorise this form of investigation; the power can only come from regulations and the general law; there is no requirement that the Law Society must establish a prima facie case before it can commence an investigation of a solicitor under the 1984 Regulations; the evidence does not disclose an absolute duty of disclosure to the subject matter of an investigation where fraud is suspected; as the investigation was authorised by the 1984 Regulations, no claim of client privilege can be raised; as the investigation is still at the preliminary stage, no issue can arise concerning the Applicant's rights under In Re Haughey [1971] IR 217; the Respondent did not usurp the jurisdiction of the Disciplinary Committee of the Law Society; the investigating accountant did have adequate qualifications and experience within the meaning of the 1984 Regulations; the investigating accountant was properly approved and appointed by the Respondent; the investigating accountant was not, in her report, guilty of any behaviour which could invalidate her report on the grounds that it lacked objectivity to independence; relief refused.

Kennedy v. Law Society of Ireland - High Court: Kearns J. - 05/10/1999 - [2000] 2 IR 104

The applicant was the principal of a law firm which was under investigation by the respondent. The applicant claimed, inter alia, that the true nature of the investigation had not been revealed to him and was in excess of the powers conferred upon the respondent. The applicant also complained that the number of client files requested by the respondent was inordinate and in addition that these files were protected under client privilege and were confidential. The applicant sought an order quashing the said investigation and additionally sought damages. Kearns J rejected the arguments of the applicant. There had been sufficient evidence of fraud to warrant the investigation that had been undertaken. The investigation in question was one an authorised one within the meaning of the Solicitors Accounts Regulations (No 2), 1984. As a result no defence of privilege or client confidentiality could be said to arise. The non-disclosure at the outset of all the purposes of the investigation did not in this instance invalidate the investigation.

1 JUDGMENT of Kearns J. delivered on the 5th day of October 1999.

BACKGROUND

2 The Law Society decided to investigate the practice of Giles J. Kennedy & Co on the 15th April 1993.

3 The minutes of the particular meeting of the Compensation Fund Committee which made the determination on behalf of the Law Society simply record a decision to "reinvestigate" a number of practices, following which six practices were identified, including that of the Applicant.

4 The Applicant's practice had been the subject matter of earlier investigations in 1983 and 1985. The 1983 investigation identified a deficit of £37,000.00 in the Applicant's Drumcondra practice which was resolved to the satisfaction of the Compensation Fund Committee in November 1983. Thereafter the further investigation took place in 1985 against a background where Mr. Kennedy was in breach of the Accounts Regulations because his accountant's certificates were in arrears. No significant deficit or irregularity was uncovered by this latter investigation.

5 Accordingly, there was an interval of time of some eight years prior to the investigation the subject matter of these proceedings. By 1993, it was the policy of the Law Society, according to the evidence of Mr. Connolly, the Registrar of the Law Society, to investigate every practice in the country as a matter of routine at least once every five years.

6 Alarming changes in the legal landscape took place between 1989 and 1993, at least insofar as the Law Society was concerned. Because of the default or fradulent behaviour of a number of Solicitors, the Law Society faced ever increasing demands on its Compensation Fund to the point where its assets were reduced from £13m to just £25,000.00 and the Law Society could no longer get insurance for its Compensation Fund. In 1989/90, claims paid (net of recoveries) amounted to £624,000.00. In 1990/91 the claims paid amounted to 4 million pounds. In 1991/92 the figure was £3,079,175.00 and in 1992/93 was in excess of 5 million. The most notable cases were those of Jonathan Brooks and Elio Malocco, but in 1992 the claims also included a payment in excess of £70,000.00 which the Society was obliged to pay in...